Time-of-Use Rates
Your new heat pump water heater brings the most energy-efficient technology into your home by using less energy than other types of water heaters. To have the greatest impact on your electricity bill, TECH Clean California requires you to enroll in a time-of-use (TOU) rate plan with your electric service provider, if you are not already on one. Your contractor will be optimizing your heat pump water heater’s scheduling so that it follows a TOU schedule (prioritizing energy usage during off-peak times), meaning that you will avoid paying the highest electricity prices to operate your new heat pump water heater, without sacrificing your comfort.
What is a TOU rate plan?
When demand for energy is high (typically in the evenings) it’s more expensive. Rather than charging a flat rate for electricity, a TOU rate plan offers customers the flexibility to shift some of their electricity use to take advantage of times of the day when prices are lower. This gives you more control over your energy costs and can save you money. California electric utilities now offer a variety of TOU rate plans to choose from. Check your provider’s website, linked in the “What are my TOU rate options and how do I know which is best for me?“ section, to learn about the specific rates in your area.
Customers can shift energy use away from “peak” hours (usually 4:00 p.m. to 9:00 p.m.) when electricity prices and fossil fuel power generation are at their highest, to “off-peak” hours when there is abundant clean and lower cost electricity.
Frequently asked questions
TOU rate plans allow customers to take advantage of lower electricity prices at certain times of the day when energy demand is lower and renewable generation is at its highest.
TOU rates also help even out the demand on our power grid which helps avoid power outages and allows us to take better advantage of energy produced from renewable sources like solar and wind, which makes energy cleaner and more reliable for all Californians.
Customers who receive an incentive for a heat pump water heater in their home (either single family occupants and tenants, or owners of multi-family buildings with unitary systems) and are electric customers of PG&E, SCE, SDG&E, and SMUD are required to be on a TOU rate. Small business customers who receive a TECH Clean California heat pump water heater incentive are also required to be enrolled in a TOU rate in order to receive the TECH incentive. Commercial customers that are unable to enroll in a TOU rate, such as those who do not have a smart meter, are not eligible to receive a TECH HPWH incentive.
The following participants are exempted from this requirement:
- Multi-family Central Heat Pump Water Heater installations
- Large Commercial Unitary Heat Pump Water Heater installations
- Residential customers whose electric meter is mechanical (i.e., not a smart meter).
For multi-family unitary heat pump water heater projects, tenants are encouraged to enroll in a TOU rate, but only the property owner is required to enroll in a TOU rate.
Customers who receive a heat pump water heater incentive through a TECH–certified contractor will, by default, have a heat pump water heater installed and programmed in a way that will automatically reduce electricity use during peak hours, but still provide you with hot water whenever you need it.
Yes! Some electric service providers also have programs that optimize the operation of your heat pump water heater on a daily basis to dynamically shift electricity usage from the peak hours. These programs direct the heat pump water heater to pre-heat your tank one to three hours before the peak period, so the hot water is topped off in your tank and kept hot until you need it. Then, during the peak or event period, the water heater avoids operation unless operation is required to meet hot water demand. In addition, these programs also provide an enrollment bonus ranging from $50-$150 and an ongoing participation bonus of $2-$5 per month. Check out PG&E WatterSaver.
The optimization programs which are currently available are listed below. If you are a customer of either of these utilities you should enroll, to help reduce what you’re paying for electricity to operate your new heat pump water heater! Please note that this is just a bonus – you still need to enroll in one of the demand response programs on the Demand Response page in order to meet your enrollment requirement.
- For PG&E electric customers: WatterSaver
- For SMUD customers: PowerMinder
Your electric bill will display which rate you are currently enrolled in. Many TOU rates include “TOU” or “EV” or “ELEC” (for electrification) in the name.
It’s easy to enroll in a TOU rate. On your TECH Clean California Program Terms and Conditions, you can check a box to either:
- Enroll in the default TOU rate your electric service provider has chosen for customers that receive TECH Clean California incentives
- Remain on your current TOU rate
- Write in your choice of TOU rate
Your electric service provider will then complete your enrollment on your behalf.
You are encouraged to explore the TOU rate options provided by your electric service provider and select the TOU rate which best meets your needs. All TOU rates offered by your electric service provider for your customer type (i.e., residential or commercial) are eligible options, including those without “TOU” in the name.
Links to electric service provider TOU rate plans (If your service provider is not listed here, you are not required to enroll in a TOU rate):
- PG&E Residential (all rate options on this page except “Tiered Rate Plan E-1”)
- PG&E Commercial
- SCE Residential
- SCE Commercial
- SDG&E Residential
- SDG&E Commercial
- SMUD Residential
- SMUD Commercial
The TOU rate home pages linked above contain helpful resources and rate comparisons to help you choose the best rate for you. Here are some additional resources if you would like to dig deeper.
If you do not select a specific TOU rate when signing the TECH Clean California Program Terms and Conditions, and you are not currently enrolled in a TOU rate, you will automatically be enrolled in your electric service provider’s default rate to receive TECH Clean California incentives. The default rate is intended to provide the most benefit to the majority of customers.
For ease of participation, each of the participating electric utilities has identified one of their TOU rates as the “default” which customers may choose to enroll in by checking a box on their TECH Clean California Program Terms and Conditions. Each of these default rates was identified by the electric service provider as the option they believe will provide the most customers with the most benefit.
Default TOU rates are listed below by electric service provider, with external links for more information:
Your selection of TOU rate will remain in effect until you contact your electric service provider to change it. Typically, customers must remain on a rate for a period of 12 consecutive months after enrolling, but this may vary by electric service provider.
TOU rates encourage customers to shift energy usage to times with abundant renewable power generation and lower greenhouse gas emissions. By making these slight shifts we can reduce the need for “peaker plants” which are only used when energy demand is high and are typically powered by fossil fuel, have higher emissions, and are more expensive. By avoiding the need for “peaker plants,” California can reduce greenhouse gas emissions, reduce air pollution and keep energy prices lower for everyone.
If you are a customer of PG&E, SCE or SDG&E but your electricity is provided through a Community Choice Aggregator (CCA), your electric bill will list your Electric Generation charge as a separate line item under your account summary. This line item may list “CCA” or the name of your CCA. Examples of how to locate this information are linked below, based on electric service provider:
- PG&E: https://www.pge.com/pge_global/common/pdfs/customer-service/other-services/alternative-energy-providers/community-choice-aggregation/Billing-Callouts-CCA.pdf
- SCE: https://www.sce.com/partners/partnerships/community-choice-aggregation/-Implementation-and-Operation-/Understanding-Your-CCA-Bill
- SDG&E: https://www.sdge.com/new-understanding-your-cca-bill
If you receive electricity through a CCA, your CCA offers similar TOU rates as compared to SCE, PG&E, and SDG&E. You would still follow the same enrollment process as everyone else. You can either accept the default rate offered by your electric service provider or you can write in your rate choice. You can check your CCA’s website to see how your electricity prices may differ.
If you installed solar panels on your home on or after July 1, 2017, and you receive electric service from PG&E, SCE or SDG&E, you are already on a TOU rate. Customers who have solar power but are not on a TOU rate will be put on a TOU rate. Customers on solar who are moved to a TOU rate can benefit by maximizing energy consumption during the daytime when solar is being generated and minimizing the amount of power they export to the grid in the middle of the day.
For customers with existing solar systems under a Net Energy Metering tariff, enrolling in a TOU rate or changing to a new TOU rate should not change your NEM status. NEM is a tariff defining the requirements, processes, and compensation methodologies for customer with on-site renewables – it does not take the place of an electric rate structure. Changing rate structures will not trigger a change in NEM status from NEM1.0 to NEM2.0 or the new Net Billing Tariff (NBT).
